Search in:

Are daily deals dead?

Nina Hendy

Australia was once plagued by group buying sites, with the number of cut-price deals offered online reaching saturation point.

Fuelled by our love affair for a bargain, and in the thick of the financial crisis, growing numbers of consumers signed up to receive email deals from their favourite discount sites each day.

At the peak, more than 80 group buying sites were operating in Australia. But major consolidation and some failures have seen deal site numbers fall to around 30 still operating.

Between January and March 2013 Australians spent more than $115 million on group buying sites, according to the latest Online Group Buying Study by technology analyst firm Telsyte. This represents a decline of 7 per cent on the same period in 2012, when there were more players in the market.

Advertisement

But the bulk of the consolidation is complete and the group buying sector is expected to generate revenues of around $500 million this year, Telsyte predicts.

Nevertheless, there’s no doubt the group buying sector has had a few setbacks, with frequent consumer complaints about lengthy delays on deals being fulfilled or redemption terms being too rigid.

The industry was also rocked by a major recall announced by livingsocial.com in 2011 after a deal offering cut-price Havaianas thongs was unable to be fulfilled.

What do you think? Are you frustrated with daily deals? Or is your love affair with deal sites far from over?

The sector has wised up since then, launching an industry code, with member sites identifiable by the Group Buying Code Member logo listed on their websites and offers.

Complaints against group buying sites have also nearly halved in recent months, according to NSW Fair Trading. Improvements include better complaint handling processes, taking responsibility for problems and industry-wide self regulation.

Nationally, complaints about group buying have dropped from more than 800 cases in May 2012, to about half that number in September.

“However, the level of complaints levelled at a few specific traders continues to be of concern to us. We will continue to monitor the industry’s compliance and will not hesitate to take enforcement action when necessary,” the Fair Trading commissioner, Rod Stowe said.

Telstye names Groupon, Scoopon, LivingSocial, Cudo and OurDeal as the top five active players in the market, which generate more than 80 per cent of market revenue.

“The industry is starting to mature, with merchants and group buying sites understanding that they need to be more selective in the types of deals offered.

“Food, dining, health and beauty will continue to provide a solid base of revenue. In 2013 we expect to see the emergence of deals which aim at more affluent demographics and deals that require consumers to commit to ongoing delivery of products such as health supplements, baby consumables and hygiene products,” Telsyte senior research manager Sam Yip says.

Scoopon is a major industry player, launching in May 2010 and selling more than six million deals.

The site’s general manager Jon Beros says Scoopon has remained a dominant player because it has adapted its offering as consumer preferences have changed.

At first, consumers were turned on by the offer of a cheap deal, but now they want deals on offer on mobile and localised deals they can access close to home.

“When the industry launched, any sales person with a phone and internet access could run a group buying site. But there was an unsustainable number of sites operating, so something had to give,” Beros says.

“Scoopon has continued to grow because we understand consumers want compelling offers for an experience they have wanted to enjoy for a while, at a great price. They also want those grudge buys like a car wash at a reduced rate,” he says.

Telsyte predicts that the industry will see new players create restaurant booking sites, which provide exclusive discounts to subscribing consumers, and online coupon sites, which allow consumers to access discount coupons for minimal cost.

But businesses considering listing an offer on a deal site should approach with caution, warns the owner of Ballina Beach Village, Rikki McDonald Grinberg.

“We have been steady users of deal sites to market our property over the past few years. We achieved $72,000 in sales in the first deal we sold, but with mixed results. We have learned not all deal sites have the right demographic, or the database to justify the sale.”

Vendors need to be extremely careful about how they use a deal and be sure they can meet the obligations, she warns.

“The deal sellers are always pushing for a really big deal, but that can be financially crippling to the vendor. There needs to be strict rules regarding the uptake of the deal,” she says.

Has your business been bitten by a deal site? Or are deals a successful marketing tool for your business? Have your say.

48 comments

I had too many bad experiences with the deal sites and stopped using them.

Commenter

ym

Location

Melbourne

Date and time

May 30, 2013, 7:20AM

Group buying is very different to daily deal sites like Catch of the Day, Oz Sales etc. They are selling product at discounted prices & send out the products immediately .......different to group buying sites who sell motel/hotel rooms you can't use during school holidays or other times when you want to use them or overbooked restaurants.

Commenter

Bazza

Date and time

May 30, 2013, 8:46AM

I just had a quick glimpse at catchoftheday.com... Looked ok.

Commenter

Kel

Date and time

May 30, 2013, 9:42AM

Well written article.... Half of the deals are either useless or irrelevant and with decent research consumers will find that the deal is not really a deal as the same can be bought without going through the deal site.

Commenter

TaherSD

Location

Sydney

Date and time

May 30, 2013, 7:35AM

I found the same thing. For most of the accomodation deals I was able to use other websites that I know to find the same room/offer either the same price or cheaper. Whenever I find a deal I think is good value, I research and make sure it is before I purchase.

I did however find that for the most part the restaurant deals were actually great value, although I never understood why the restaurant would then treat you like a second class citizen. I would definitely go back to a restaurant I had discovered with a scoopon if it was a great experience. I think the fact that people now just chase deals and there is no repeat business is the fault of the restuarants, not the customers. They have assumed that they won't get any repeat business and made it a self fulfilling prophecy.

Commenter

Nic

Location

Sydney

Date and time

May 30, 2013, 10:22AM

Consumers learn from experience - the photos may look nice, but the actual goods often disappoint. Postage cost is high and often you have to go to a depot to collect your items because it's easier for the courier to leave a card than to knock on the door.

Commenter

StephenCastlecrag

Date and time

May 30, 2013, 7:48AM

bad couriers are also ruining my experience with online shopping. I haven't tried these daily deal sites but i have had my share of bad experiences with couriers. to a point where i now kinda getting fed up with it and it's turning me off online shopping. it's a shame. there are some online stores that i would love to shop regularly but chose to not purchase with them anymore due to their choice of courier. :( These businesses/stores are losing business based on their partnership with certain bad courier companies. which is sad because it's not the stores fault. it's the couriers. yet the store suffers the consequences.

Commenter

badcouriers

Location

sydney

Date and time

May 30, 2013, 9:05AM

I had a couple of good experiences but most places made you feel like a second class citizen, one restaurant even had a semi-outdoor area that they placed they Scoopon customers with a black and white photocopied menu - no more for us thanks!

Commenter

Seanster

Date and time

May 30, 2013, 7:49AM

Was that Emmilou Tapas in Surry Hills? Same experience was had by my wife and I. It wasn't too bad, but the segregation isn't necessary.

Commenter

Bazooka Joe

Date and time

May 30, 2013, 8:55AM

Yes, I've seen this a few times. Full-paying diners get the leather-bound menus while group buying cheapies get little A5 slips of paper. I don't know why restaurants bother participating if they're not going to try to give a good first impression to visiting customers.